What Is an Offshore Banking Unit (OBU)?
An offshore banking unit (OBU) is a bank shell branch, located in another international financial center. For instance, an offshore banking unit could be a London-based bank with a branch located in Delhi. Offshore banking units make loans in the Eurocurrency market when they accept deposits from foreign banks and other OBUs. Eurocurrency simply refers to money held in banks located outside of the country which issues the currency.
Local monetary authorities and governments do not restrict OBUs' activities; however, they are not allowed to accept domestic deposits or make loans to residents of the country, in which they are physically situated. Overall OBUs can enjoy significantly more flexibility regarding national regulations.
About Offshore Banking
- Bangladesh Bank first allowed offshore /banking operation in 1985
- Specialized banking services offered to enterprises of EPZ
- Transact only in foreign currencies
- Can be a distinct branch or booth of an existing branch
- Separate licensing is required to carry out offshore banking
- Trade services products
- Letter of credit
- Discounting of import and export bill
- Bank guarantee
- Deposit products
- Term/Fixed deposit
- Savings deposit
- Current deposit
- Loan products
- Short term loan i.e. cash credit, PAD, LTR, FDBP etc.
- Long and medium term loan
- Fully foreign owned (Type A) enterprises of EPZ
- Joint venture (Type B) enterprises of EPZ
- Fully local owned (Type C) enterprises of EPZ
- Foreign companies
- Non Resident Bangladeshi nationals
- Resident companies of Bangladesh